Study Of Standard For Examination Of Documents And Discrepancy Issue Under Letter Of Credit

The "Uniform Customs and Practice for Documentary Credits (2007 Revision)" (UCP600), which was promulgated by International Chamber of Commerce took into effect on July 1,2007. UCP500 is phasing out the stage of history after 13 years of using. With the implementation of UCP600, banks have made major changes to the standard of examination of documents under L/C. And in recent years, with the rapid development of banking, insurance, transportation industry and the complex international trade situation, the participants in the letter of credit operations encountered many new problems. In addition, the high fees of letter of credit, complex process and the existed fraud and extortion, especially about 3/4 of the documents are refused due to discrepancies in the first delivery, making the credit utilization rate dropped significantly. Documents under letters of credit are refused by the issuing bank due to discrepancies in the first delivery seriously affects L/C's status as the cornerstone in international trade and greatly reduces the credibility of the letter of credit, which can not ensure that international trade is carried on smoothly, freely and fairly and the letter of credit security has been shaken, causing the examination of documentary under L/C complicated and full of crisis.In the Letter of Credit activities, examination of the documents is a very important job and the most important issue is which criteria is adopted in examing documents. This thesis points out that the subjective reason of discrepancies is the variance of standard in examing documents under L/C. The premise and guarantee to avoid discrepancies are understanding and mastering standards of examination of documents and confirming the reason of discrepancies. In this paper, empirical analysis, case studies, comparative studies and qualitative analysis of a combination of methods are adopted, the substance of the letter of credit consistent with the standard single-trial, mirroring standard, strict compliance standards, double standards and standards of rational members of a single trial are elaborated both in theory and practise, specifically the strict compliance standards are introduced. The core of the credit system is the strict standards Consistent standards between real and mirror match, which is the cornerstone of the basic principles of credit system. There is no commercial viability without strict compliance standard.This paper analyzes the causes and consequences of discrepancies of L/C from export enterprises their own, letter of credit, sales contracts, the issuing bank, etc. both with combination of subjective and objective reasons and introduce preventive measures of discrepancies. When discrepancies appear, how the export enterprises take active measures to deal with, change from passive to active, properly solve the problem, and ensure receipt of proceeds safely. It has important theoretical significance and practical value to prevent risks for the enterprise, to defuse the crisis, to receipt proceeds safely and timely.